Regulation of tax professionals in Malta : viable or futile?

Abstract

Purpose: This study aims to analyse the perspectives of various stakeholders on the possibility of regulating the tax profession in Malta. It examines in detail the main implications of regulation, while investigating its potential positive and negative effects. After considering the various aspects of regulation, this study intends to determine whether there is support in favour of regulation for tax professionals in Malta, and explore the possibilities of it actually happening at some stage in the future. Design: Data was primarily collected from twenty-three semi-structured interviews. Although most of the interviewees work exclusively in taxation, either in the private sector, or within governmental departments, several non-tax specialists were also interviewed to explore different perspectives. Prior to the interviews, a simple questionnaire was disseminated thereby providing the author with initial insights into the Maltese perspective, while yielding very basic statistical figures, which subsequently, complemented the detailed interview observations. Findings: The study shows that regulation for tax professionals in Malta is much needed. It was emphasised that there must be a change from the current scenario of no regulation. Respondents typically noted that a regulatory structure which imposes that tax professionals must satisfy mandatory educational and practical requirements would guarantee quality assurance, when compared to the current scenario, where everybody could provide complex tax services. Although there was widespread support for regulation, respondents were quite sceptical about whether regulation would be implemented some time in the future. This is mainly due to the many vested interests of different stakeholders who could be adversely affected by regulation. Conclusion: This study concludes that regulation is the way forward. Considerable EU and OECD regulation has been implemented locally over the past two years, and thus, coupled with the mandatory disclosure rules applicable for tax intermediaries, it places great responsibilities on anyone providing tax services. It is thus vital to ensure that such individuals have the required level of competence and are ‘fit and proper’. This could only be achieved by regulation which places a benchmark on whoever is willing to provide tax services. Nonetheless, regulation on its own is insufficient since this must be supported by a consistent and adequate level of enforcement. This is a challenge for a micro state like Malta, keeping in mind that personal connections are quite tenacious. Value: Given that there has never been a local study focusing entirely on this subject matter, this research has pursued to address this lacuna in the literature. Moreover, it aims to provide a basis to re-initiate discussion among policy holders on the possibility of implementing a set of rules for people working in taxation.